A credit report is a vital document while applying for any kind of loan. Financial institution asks for credit report to check your creditworthiness and repayment behaviour. There are four main credit bureaus in India namely TransUnion CIBIL, Equifax, Experian and CRIF High Mark.
In this blog, we will learn more about what is a CRIF report and its importance in Personal Loans.
Along with CIBIL score, lending institutions also analyse your credit reports. Credit scores are part of credit report. A credit report provides the entire credit history of the borrower. As a credit information company, CRIF High Mark collects data of individuals and businesses to prepare credit reports based on their repayment history. It generates a credit score value ranging from 300 to 900. This 3-digit number represents the likelihood of a borrower to repay the loan. A CRIF score below 551 is considered poor while above 700 is considered good.
A CRIF report is a report of all your credit history. Although it primarily focuses on the use of credit to analyse your financial behaviour, the report does not include any other bills, income, investments, or other assets.
To generate a CRIF credit report, CRIF High Mark considers information such as current outstanding debts, repayment history, new loan applications, credit utilisation ratio, debt-to-income ratio, credit mix (different types of credit accounts you have), and length of credit history. This information will also be shown on your CRIF credit report. Both individuals and businesses can have their credit reports. Also, lending institutions can also request CRIF to provide your or your business’ credit report before granting you the loan.
Based on a report by CRIF High Mark, there is a rise in Personal Loan borrowers in India. A surge in Personal Loan segments indicates that people prefer to conserve cash. This is because taking loans and buying products on EMIs allow them to have enough liquidity and feel financially secure.
During the festival seasons, Personal Loans were observed to clock nearly double growth. Also, with the introduction of digitalisation in financial institution, there is a huge rise in the Personal Loan borrowers. Digitalisation has streamlined the loan application process especially from new age NBFCs and other financial institutions.
Also Read :- CRIF Vs CIBIL: Explore the Major Difference
According to a report by CRIF High Mark titled ‘How India Lends’, the demand for Personal Loans is largely driven by millennials, young borrowers, and middle-aged individuals. Digital avenues are the most preferred platforms for young millennials to communicate and make decisions. This gives rise to increased use of tools like Personal Loan EMI calculators offered by fintech and financial institutions. These tools help millennials make financial decisions and explore the right schemes, interest rates, and loan options that fit their needs. It is no doubt that the younger generation is becoming aware and making mindful choices when it comes to money.
Personal Loans also help millennials meet any shortfall of funds. These loans are usually used for assisting with the purchase of big-ticket items such as cars, higher education, expensive vacations, medical emergencies, or popular tech products. The rise of zero-cost EMI also motivates individuals to take loans.
Your CRIF credit report is a key part of your Personal Loan application. It can affect your chances of achieving long-term dreams, such as owning a car, going on that long-awaited vacation, or fulfilling your educational goals. Since lenders assess your credit report to understand your repayment history and money-management skills, having a positive report is important. Although each lender has their own risk tolerance, negative entries will be considered grounds for caution.
A positive report will help you put your best foot forward and give a good impression to your lenders. Financial institutions and some NBFCs are usually more stringent with a credit report. A credit score above 750 puts you in a good spot for Personal Loan approval. A high credit score will also help you retrieve favourable loan terms, such as lower interest rates and extended loan duration.
To conclude, a CRIF report gives insight into your credit history, credit score, and overall financial behaviour to a lender. Consider making use of the free credit report service offered by CRIF every year. This will help you understand how you can make significant changes in your financial future for a positive CRIF credit report.
No, CRIF and CIBIL scores are not the same. Although both credit information bureaus provide credit-related services, they are owned and licensed by different entities. While the Reserve Bank of India licenses CRIF score, CIBIL is owned and maintained by TransUnion.
The purpose of CRIF is to curate credit reports and calculate credit scores based on the financial information submitted by lenders, financial institutions, corporates, or individuals.
Yes, according to CRIF High Mark, 580 - 649 are considered fair, 650 - 749 as good, and above 750 is considered excellent.
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When it comes to credit reports and scores, CIBIL (Credit Information Bureau India Limited) is a prominent name in India. CIBIL collects and maintains the credit information of individuals and assigns them a credit score.
In India, two prominent credit bureaus, CIBIL and Equifax, provide credit scores that are widely used by lenders and individuals. Both CIBIL and Equifax play a crucial role in the financial ecosystem, and understanding the difference between CIBIL and Equifax is important.
Credit scores play an instrumental role in financial decision, as they help lenders evaluate an individuals or a business creditworthiness. In India, there are two primary CIBIL bureaus, commercial CIBIL and CIBIL consumer, cater to different segments of borrowers.